Note: This blog includes excerpts from the brief.
A new policy brief released today by Brad Brooks-Rubin, “Yes, We Have Leverage: A Playbook for Immediate and Long-Term Financial Pressures to Address Violent Kleptocracies in East and Central Africa,” summarizes more than 15 different options that the international community, especially the U.S. government, can use to exert leverage on violent kleptocracies in east and central Africa through use of financial pressure tools and related diplomacy. It counters typical refrains often heard by policymakers in the U.S. and elsewhere, such as “We have no leverage.” “All of this leader’s money is parked elsewhere in Africa, in Dubai, or Europe.” or “Sanctions do not work.”
As the brief discusses, these strategies are premised on four key findings from The Sentry’s investigations, including that senior officials in East and Central Africa responsible for conflict and atrocities reap significant financial benefits from their business dealings in multiple economic sectors and through work with facilitators and enablers within the region and across the globe, and that these companies and their business sectors operate largely in the U.S. dollar, which provides the U.S. government with jurisdiction over many of the transactions;
“The United States possesses leverage against those who commit atrocities in East and Central Africa. We know that violent kleptocrats, warlords, and their business networks rely on the U.S. dollar when they move illicit funds. When they do, the U.S. government can act and have a direct impact through modernized sanctions and anti-money laundering measures. These tools have worked against other threats, and it is time they are deployed strategically to advance the cause of peace in East and Central Africa.” – John Prendergast, Founding Director at the Enough Project
“Yes, We Have Leverage,” details the what, why, and how on using various specific tools the U.S. has at its disposal, including the following:
- Focus on network sanctions, not just individual asset freezes
- Deploy sectoral sanctions
- Explore secondary–type sanctions
- Use sanctions tools other than asset freezes, e.g.:
- Limiting the target’s ability to access financing/credit/debt of longer than 30 or 60 days related to a specific sector of concern, such as oil or mining;
- Restricting the target’s ability to participate in U.S. government contracts, procurement, or other programs;
- Prohibiting the target’s network from benefiting from funding via Overseas Private Investment Corp. (OPIC) or Export-Import Bank (EXIM) of the United States, etc.;
- Prohibiting the target from receiving exports or re-exports of U.S. origin goods, technology, or services;
- Requiring public reporting from any U.S. persons doing business with the specific target or sector, specifically to ensure appropriate due diligence is being exercised;
- Prohibiting the use of correspondent banking services for the target, or particular types of financial transactions
Direct Anti-Money Laundering (AML) measures
- FinCEN and other FIU Advisory/Investigative steps
- Special Measures pursuant to Section 311 of the Patriot Act.
- Establish a 314(b) process for sharing among banks.
Multilateral AML Measures
- Raise Concerns within the Financial Action Task Force (FATF)
- Raise concerns about South Sudan and AML within the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG)
- Highlight corruption as a concern for “Mutual Evaluations,” such as for Kenya and Uganda
- Demarches by State and Treasury officials that remind facilitating governments of the way in which they are risking their substantial investments in their banking and commercial sectors.
- Public statements and press releases by U.S. officials that raise concerns about these issues, focusing attention on the need for banks and regional actors to address them
- Convening of banks to review specific concerns and remind them of the risks to their institutions from these threats
- Convening of commodities traders and natural resources firms, along with a press release,
- Establishment of an interagency Task Force on the Licit and Illicit Economy of East and Central Africa that identifies individuals, entities, and sectors of concern, and also develops research on mechanisms for responsible investment;2
- Technical assistance through Treasury to help regional governments improve their AML detection and enforcement efforts.
Finally, the policy brief recognizes that “de-risking,” or banks pulling out of an entire region or area to avoid possible penalties, is a real concern. To mitigate against that, Brooks-Rubin notes, taking any of the actions above should come with a clear message from the U.S. government that the concerns are limited to specific networks and patterns of conduct, encouraging banks to ensure that people in the region have access to capital and banking for legitimate purposes.